There are common audit findings among Members in a number of areas (inspection themes), including four that have been discussed by IFIAR with representatives from the six largest international audit firm networks since 2010: professional skepticism, group audits, revenue recognition, and the role of the engagement quality control reviewer.

The survey results identify and rank the Members’ most commonly identified audit findings by inspection theme.

The survey results suggest that audit firms need to do more to improve the consistency of performance on individual audit engagements, including remediating the inspection findings and determining the possible root causes underlying these findings.

The survey data indicates that the scale of Members’ inspection activity at the largest international audit firms varies by jurisdiction.

The information in this report may be of use to audit firms, audit regulators, other regulators, policy makers and standard-setters in their efforts to improve audit quality. It also may be of use to investors and audit committees as an indicator of the current status of inspections of auditors of public companies, including major financial institutions in jurisdictions around the world.

Auditors and audit firms need to do more to improve their consistency of performance, noted by the first global survey on audit regulators' inspection findings released by the International Forum of Independent Audit Regulators (IFIAR) yesterday.

Audit Oversight Board (AOB) Malaysia has been an IFIAR member since September 2010. AOB took part in this global survey carried out IFIAR as it is important for audit regulators to bring together issues commonly faced in the course of carrying out their duties, said Nik Mohd Hasyudeen Yusoff, Executive Chairman of AOB.

"This is an eye opener for all stakeholders in the financial reporting value chain as the exercise to highlight the strength and weaknesses of the audit industry which could help to enhance the reliability of financial statements. While auditors are expected to do more in enhancing audit quality, other stakeholders such as directors and preparers need to ensure financial statements are prepared in accordance with financial reporting standards before they are audited," he said.

"Board of directors should be interested to understand whether audit firms that they hire had been inspected by the AOB. This includes understanding the process the firms adopt to enhance audit quality. Another question that they should ask is whether the auditors could perform quality work given the scope and fees which they quoted," Nik added.

The survey is the first global survey which summarises audit inspection findings identified by independent audit regulators, which are members of IFIAR, located around the world. The survey was designed to identify the level of inspection activity and common inspection findings related to the audits of public companies. The survey also responds to a request from the Financial Stability Board to provide information regarding findings from the inspections of audits of major financial institutions.

The survey results confirm that many global audit regulators are noting common findings across the different jurisdictions. It indicates that the largest number of inspection findings in audits of public companies occurred in the areas of Fair value measurements, Internal control testing; and Engagement quality control reviews.

That so many findings recur year after year suggests that audit firms should continue to improve their auditing techniques and their oversight policies and procedures. Audit firms also should take steps to develop a robust root cause analysis to gain a clearer understanding of the factors that underlie the inspection findings and take appropriate actions to remediate those findings.Many members who responded to the survey also noted that a lack of auditors' professional skepticism on audit engagements was a significant performance issue as well as a possible cause underlying many inspection findings.